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Worldwide Server Market Posts Consistent Growth

Posted on: Sunday, 25 July 2004, 06:00 CDT

According to IDC's Worldwide Quarterly Server Tracker at the end of May, factory revenue in the worldwide server market grew at 7.3 percent year-over-year to $11.5 billion in the first quarter of 2004, marking the fourth consecutive quarter of positive overall growth. It was also the second consecutive quarter in which all major categories of the worldwide server market grew when compared to the same period in the previous year.

The breadth of growth shows that demand for server systems is on the rise, although seasonal variations caused first-quarter revenues to be less than fourth-quarter revenues.

"IT spending is clearly trending upward and IT organizations are beginning to rebuild their computing infrastructure," said Vernon Turner, group vice president of Global Enterprise Server Solutions at IDC. "Following nearly three years of slowed spending during the economic downturn, we see that server systems are a priority in these rebuilding efforts."

Top server market findings were the following.

* Strong year-over-year unit shipment growth of 22.4 percent.

* Dell and Sun Microsystems were in a statistical tie for the number 3 spot in the rankings of server vendors, based on worldwide factory revenue results that differed by less than 1 percent.

* Linux server sales grew revenues at 56.9 percent and unit shipments at 46.4 percent, the seventh consecutive quarter of double- growth revenue growth.

* Windows servers posted double-digit growth, as revenues grew 16.4 percent and unit shipments grew 26.5 percent in year-over-year comparison.

* Building on fourth quarter gains, IBM's mainframe servers showed market strength in the first quarter of 2004, with 33.7 percent revenue growth and 41.8 percent unit growth, compared with the first quarter of 2003.

* Unix server revenue declined slightly, dipping 3 percent worldwide year-over-year; but Unix server revenues showed growth in Japan and Asia/Pacific, where Unix-based IT infrastructure and telecommunications are expanding.

The following are the overall server market standings by vendor.

* IBM held on to its number 1 spot in the worldwide server systems market with 29.7 percent market share in factory revenue while growing factory revenue by 20.5 percent compared to 1Q03.

* In terms of unit shipments, HP was the number 1 vendor worldwide. In terms of factory revenue, HP took the number 2 spot with 26.9 percent share, growing revenue 3.8 percent compared to 1Q03.

* After growing server market revenue every quarter since 2001, Dell pulled even with Sun. Because factory revenue results differed by less than 1 percent, Sun and Dell were in a statistical tie for third place in 1Q04.

Sun has held the number 3 spot in the worldwide server market since HP merged with Compaq in May 2002.

The x86 server market dynamics continued to be strong in 1Q04. Factory revenue grew 14.1 percent to $5.1 billion worldwide, while unit shipments grew 23.5 percent to more than 1.3 million servers worldwide.

"The strong growth of x86 servers can be linked to their use across a wide range of computing workloads, combined with a very strong software and hardware replacement cycle," said Mark Melenovsky, research director of IDC's Global Enterprise Server Solutions.

"New x86-64 servers, which support both 32-bit-and 64-bit applications, showed 35.1 percent sequential growth in unit shipments. Although this category accounted for less than 2 percent of the total x86 market in Q104, this space is expected to expand rapidly by 2005, given Tier 1 OEM support for AMD's Opteron processor, Intel's February announcement of 64-bit extensions, and x86-64 platform support for 64-bit Windows and 64-bit Linux for both technical and commercial applications."

This is the second consecutive quarter in which Einux servers have posted more than $900 million in worldwide factory revenue, nearing the $1 billion mark. Compared with 1Q03, Linux servers showed 56.9 percent growth, while unit shipments grew 46.4 percent.

The Windows server market showed strong growth, with factory revenues increasing by 16.4 percent year-over-year and unit shipments gaining 26.5 percent.

Copyright Publications & Communications, Inc. Jun 2004

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